ITAT Deletes Addition made by AO on ground of Disclosure of Genuine Documents of Land Purchase u/s 56(2)(vii) of Income Tax Act [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition made by the assessing officer on the ground of disclosure of genuine documents of land purchase under section 56(2)(vii) of the Income Tax Act,1961. 

Asha Vijay, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer during the assessment proceedings. 

P.R. Kothari, the counsel for the assessee contended that the assessee had possessed the house before the accounting year and then no income could be deemed on account of lower payment of purchase price. 

It was further submitted that the transfer had taken place before the accounting year then section 56(2)(vii)(b) of the Income Tax Act will not apply to the purchasers and the addition made by the assessing officer was not as per the law and liable to be deleted. 

P.P. Barman, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the sale deed had been executed in the accounting year relevant to the assessment year and the assessing officer construed the difference between the sale value disclosed in the sale deed vis-à-vis determined by the Stamp Duty Valuation Authority as deemed gift in the hands of the assessee and brought it to tax under section 56(2)(vii) of the Income Tax Act. 

The bench observed that All the factors would indicate that transfer within the meaning of Section 2(47) of the Income Tax Act had been completed before the relevant assessment year and no deemed gift under section 56(2)(vii)(b) of the Income Tax Act was to be determined in the hands of the assessee. 

The two-member bench comprising Rajpal Yadav (Vice President) and Rajesh Kumar (Accountant) held that the addition made by the assessing officer was not as per the law and is liable to be deleted while allowing the appeal filed by the assessee. 

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